Self Employment

Sole trader
Most self-employed workers are sole traders, running the business themselves. This is the simplest form of business structure. This includes working in the ‘gig economy’ as freelancer.

Freelancer
Money is earned per-job or task. Jobs can vary in duration, depending on the business, from a few minutes to many years. Freelancing has experienced substantial growth as many companies find the flexibility of hiring independent freelancers attractive. This has created opportunities that can fit-in well alongside study. However, as most gigs offer fewer rights, such as sick pay and holiday pay, they have been criticised by some as exploitative.  Platforms such as Fiverr and Upwork match freelancers with businesses and pay them per job. This can enhance student and graduate skills and experience.

Partnership
A formal arrangement between at least two parties to collaborate and share profits. Partners might share liability or can form a limited liability partnership.

Limited company
A limited company is a legally distinct organisation from the people that own and manage it. This allows the owner(s) to separate their personal assets from their business assets. There are added reporting obligations and Companies House provides detailed information on starting a company.

Entrepreneur
This particular group of self-employed people are characterised by their mindset and traits which make them suited to success in self-employment.

Attitude to risk. They tend to be comfortable with risk, but focus on minimising risk, rather than being reckless gamblers, as they are sometimes portrayed.

Continuous improvement. A mindset of seeing setbacks as opportunities to learn rather than ‘mini-failures’ makes entrepreneurs resourceful and tenacious while getting better at what they do.

Dedication. They often ‘think big’ and therefore put in long hours investing time, energy, and resources to reach their goals.

They are also associated with persuasive communication skills and an ability to innovate.

Whether student or graduate, if you’re eligible to start a business in the UK, it is relatively easy to launch your business. There is little red-tape or cost to prevent some businesses from trading immediately.

Student businesses
UoR Students have started businesses including:

• drawing pet-portraits
• teaching a foreign language online
• filming live music for local bands
• selling second-hand clothing
• hand-made Christmas and birthday cards.

Many businesses begin with little more than a good idea and a passion to make it work. Drive and energy are important though, as you have to motivate yourself to develop the business and overcome problems.

International students
Unfortunately, those on a student visa (tier 4) cannot normally be self-employed in the UK. Stiff penalties exist for those violating the terms of their visas. 

Graduates (or students close to graduation) can apply for the Innovator Founder Visa.

International students have full access to University of Reading resources and support.

Support and development schemes 

• Business Idea and Start-Up Clinic led by Henley Enterprise Lab (HELAB) and supported by Henley Centre for Entrepreneurship (HCfE), is an initiative that aims to help students and alumni who have a business idea or a start-up business progress to the next level by offering one-to-one advice from a business expert. Open to all students and Alumni at University of Reading and Henley Business School, appointments are bookable on MyJobsOnline.

• ENACTUS Reading is a student run social enterprise that helps develop skills and confidence to start your own business.

• Reading Entrepreneurship Society is a student led group (Reading Students' Union) supporting entrepreneurship development through events, networking and guest speakers.

• Berkshire Business Growth Hub offers free advice and support for those looking to start or develop a business in Berkshire.

Crucially, your business needs to comply with UK law. Other requirements include:

• Finances. You’ll need enough money to start and run your business until you are profitable. A bank account is essential to manage the finances for your business.
• Equipment. Make a list of what you need, whether phone, computer, software, or more specialist equipment.
• Premises. Although many businesses start from ‘the bedroom,’ or garden shed, you’ll need to consider the space needed to run your business.
• Record keeping. A record of all your business income and costs is needed for tax returns and profit and loss calculations.

In addition, you should have a plan to develop your idea and, in many cases, insurance.

How to fund your business is a key question for any budding entrepreneur. The most common is through personal savings or friends and family. There are many other options to fund your business.  The common options are explored below.

Loans

The UK Government loan scheme for start-ups allows up to £25,000 to be borrowed. Their regularly updated database of finance and support signposts to other funding sources and assistance.

Locally, Funding Escalator helps Berkshire based businesses already trading.

Crowdfunding

Online peer-to-peer funding platforms have emerged that match those in need with those who are prepared to help. Sites like Kickstarter, Patreon and GoFundMe are perhaps the best known, and have raised money for many worthy causes, including early-stage businesses. However, specialist crowdfunding platforms that match business with investors might be a better fit. Seedrs focusses on start-ups, Funding Circle is aimed at small businesses, while Indiegogo concentrates on new technology. Startups has an A-Z directory of crowdfunding sites.

As always, do research based on your needs. As for any funding application, you’ll need to make a persuasive case to attract investors.

University of Reading has its own section on the Hubbub Crowdfunding Hub.

Intellectual property

If you have created a commercial concept, product, or artistic work such as a book, design, music, film, or play, you should consider protecting it legally through intellectual property rights. Some rights, such as copyright are given automatically, while others need to be applied for. You can also take practical measures to prevent your creations from being stolen. The intellectual property office in the UK government is responsible for patents, designs, trademarks and copyright.

The Chartered Institute of Patent Attorneys (CIPA) offer free advice clinics and legal support to pre-start-up and early-stage businesses.

Some insurance is compulsory, so research requirements for your sector before starting to trade.

Your business type and model determines your insurance needs. Common examples include:

• professional indemnity which protects businesses that offer professional services from claims against negligence
• public liability protects from claims made by the public
• buildings and contents insurance protects against theft and property damage.

There are many specialist packages out there, such as market traders’ insurance and employers’ liability insurance. UK based Startups website offers specific information on insuring your business.

You may think freelance workers don’t need insurance. This isn’t always true. So first, investigate insurance needed as a freelancer or contractor.

Tax and registering your business

After starting trading, you’ll need to register your business with HMRC.

You’ll then receive a Unique Taxpayer Reference (UTR) used when filing tax returns for the year. You will be responsible for taxes and national insurance contributions if your income is above the minimum threshold for the tax year.

Seeking ideas and opportunities

A good starting point is to identify a gap in the market or a problem you think needs solving.

Any specialist skills and qualities you have will be an asset, so consider how you might channel these into a business. Relevant knowledge and contacts in a particular field can similarly guide your idea development.

Being passionate may be a cliché but choosing something you enjoy will help keep you motivated. You’ll have your own reason for starting a business, so also consider how your idea can fit the lifestyle and values you imagine.

You can browse the Startups website small business guides for ideas. Companies House have a selection of UK Case Studies including young entrepreneurs.

Developing ideas

Feedback and testing the validity of ideas is important early on, before investing too much valuable time, money, and resources. Market research to explore the desirability and demand for your idea should highlight any inherent problems and opportunities, while directing you to successful outcomes. Also consider the type of customer for your product. Tools such as Ask Your Target Market (AYTM) can then set surveys up.

Observing trends will help identify growth markets. Look for trends that are:

• economic
• social
• technological
• caused by changes in laws or regulations.

Investigating the financial feasibility and the competition you will face will solidify your idea and perhaps lead to a business plan.

Business planning

While not often seen as the most exciting aspect of starting a business, completing a business plan anticipates many pitfalls new business owners face and often forewarns of costly mistakes. It clarifies ideas and sets goals, leads to better forecasts, and answers key questions including:

• How much money is needed?
• How will you overcome problems such as gaps in knowledge or experience?
• How will you acquire and retain customers?
• What price should your product cost?
• What profits (losses) can you expect?

Banks and investors insist on a credible business plan for funding.

Advice and templates are available to structure and guide you, including The Princes Trust who also offer support schemes, while websites such as Start Up Donut offer guidance in business planning.

Launch

It’s worth considering how you’ll create that important good first impression.

Publicity is imperative if you don’t have customers. Launch is an opportunity to create excitement and interest. Consider social media campaigns, an event or other promotions.

Growth Hackers community offer free advice and resources to grow a business.

Reaching customers and selling product will be a key priority. Facebook for Business has many resources to glean insights and connect with customers.

Time is money, so establishing policies and procedures to manage operations quickly and smoothly should be a priority. This allows others to step in when you are not there.

Customer feedback allows you to improve and iron out problems. Knowing what customers like informs development of your brand and refinement of your offer. Building a reputation is important at this stage. Do this well and your customers will publicise for you.

You may wish to recruit staff to support growth. Be sure to understand requirements for employing staff.

You may wish to plan for future with your finances, find out about pensions for the self-employed in this Aviva article.